Tale Of The $20 Gold Pieces

CISG

Closing at $11 Friday, CISG has doubled in the 16 months since suggested here. I’d like to think it may double again over the next few years, but this would be an obvious time to sell half and, with house money, see what happens with the rest.

GOLD

To fund that CISG purchase, I suggested selling GLD at $117. (Today, $113.) I don’t know much about gold, but this juxtoposition gives me an excuse to tell you a story.

In the 1930s, according to a numismatist friend of mine, the United States Mint had a loose relationship with collectors and dealers. It maintained a “Collector’s Window.” You could go up to the window and exchange circulating coins for newly minted ones, even if they’d not yet been officially released. This was never a problem until Roosevelt decided not to release the $20 gold coins they had just minted — over 400,000 of them! — in early 1933. (He wanted to limit ownership of gold to keep it from draining demand for paper money.) So, apart from two specimins sent to the U.S. Assay Commission, now in the Smithsonian, the handful that had been exchanged at the Collector’s Window — perhaps by a single dealer — were the only ones that survived. And as to those, the guys at the Collector’s Window all adopted a “who, me?” air of ignorance — and, really, why not? Where was the harm? Since old $20 gold coins had been exchanged for new $20 gold coins, Uncle Sam hadn’t lost even a gram of gold.

But word got out that the dealer had sold 15 of the coins. These the government eventually tracked down, confiscated, and melted. Which was basically the end of the story . . . apart from occasional speculation (fueled by the dealer himself with a wink and a nod) that he had actually exchanged more than 15 coins at the Collector’s Window. Like maybe 25. Everyone always assumed he was making this up to enhance his own importance among collectors — he was apparently a bit of a loudnmouth and a braggart.

Well, guess what? Cleaning out an old safe in 2004, the dealer’s family found a roll of coins wrapped in paper that they had assumed to be silver dollars, which still circulated in 1933. They freaked out when they finally undid the roll and found the “missing” ten extra 1933 $20 gold coins the guy had always claimed to have had.

The family sought out the lawyer that had successfully negotiated the settlement of the Farouk coin in 2001. His counsel was to send the coins to Washington for “authentication,” explaining the circumstances under which they were found, so as not to incur criminal charges. He predicted that the government would confiscate the coins but not accuse the family of wrongdoing — which is exactly what happened. He said the family would then have to sue for recovery — which is also what happened. They lost the first round, but just last week won on appeal.

By a 2-1 vote, the 3rd U.S. Circuit Court of Appeals in Philadelphia said Joan Langbord and her sons Roy and David are the rightful owners of the double eagle $20 gold pieces, after the government ignored their claim to the coins and missed a deadline to seek their forfeiture.

That is where it stands now. My coin dealer friend suggests the Obama administration could score “major points” with the numismatic community — along with some cash — if it eschewed further appeal. Rather than fight to keep ten ounces of gold — $11,300 worth — Uncle Sam could save all those legal fees even as it reeled in millions in inheritance and/or capital gains taxes once the coins were sold.

Coin collectors around the world are waiting to see whether the U.S. Attorney will drop the case (as it clearly should — no?) and what the coins will fetch if he does. The King Farouk example apparently went for $7.6 million.

Isn’t this fun?

Tomorrow: Why Elizabeth Warren and a lot of other very well-intended progressives whom I admire no end are on the wrong in the controvery over the TransPacific Partnership trade agreement.